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  1. Agriculture under the Europe 2020 Strategy Andrzej Grzyb Lecture, University of Economics Poznań, 18February 2011

  2. Structure of the lecture • Guidelines for Europe 2020 Strategy • Agriculture in the European Union • Agriculture and the EU's international policy • Agriculture and public goods Lecture, University of Economics Poznań, 18 February 2011

  3. Guidelines for Europe 2020 Strategy • What is Europe 2020 Strategy? • New, long-term program of periodic socio-economic development the EU • Replaced the Lisbon Strategy implemented since 2000 • Globalization necessitates joint action of the European Union countries to exit from the crisis and implement reforms • Challenges such as aging of society and growing need for efficient use of resources can be met at the level of cooperation in the European Union Lecture, University of Economics Poznań, 18 February 2011

  4. The three priorities of the Strategy Europe 2020 • Smart growth i.e. a development based on science and innovation • Sustainable growth i.e. a transformation towards a low carbon economy, effectively using the resources economy and competitive economy • Inclusive growth to reinforce economy characterized by high levels of employment and providing economic, social and territorial cohesion Lecture, University of Economics Poznań, 18 February 2011

  5. Five indicators of progress of the Strategy • Achieving the employment rate of 75% • Improving the conditions for conducting research and development, including 3% of EU GDP for investment in research and development Lecture, University of Economics Poznań, 18 February 2011

  6. Five indicators of progress of the Strategy • Reducing greenhouse gas emissions by 20% compared to 1990 levels, an increase of 20% renewable energy in overall energy consumption, efforts to increase energy efficiency by 20% Lecture, University of Economics Poznań, 18 February 2011

  7. Five indicators of progress of the Strategy • Raising the level of education, especially by reducing the percentage of dropout rates to less than 10% and increasingthe proportion of people with higher education aged 30-34 by at least 40% • Promoting social inclusion, especially throughreduction of poverty, with the aim of rising from poverty or social exclusion 20 million citizens. Lecture, University of Economics Poznań, 18 February 2011

  8. Instruments for implementation of the Strategy Guiding Initiatives (Flagship Initiatives) • prepared by the EC • implemented at EU level, Member States, regional and local authorities National ReformProgrammes • developed by EU Member States • to be ready by April 2011 Lecture, University of Economics Poznań, 18 February 2011

  9. Guiding initiatives (flagship initiatives) • Innovation Union–  improvement of the framework conditions for innovation and use of innovation to solve major social and economic problems identified in Europe 2020 Strategy • Youth on the Move – improving quality at all levels of education and training as well as increasing the attractiveness of European higher education internationally Lecture, University of Economics Poznań, 18 February 2011

  10. Guiding initiatives (flagship initiatives) • Digital Agenda for Europe– achieving sustainable economic and social benefits of the single market of digital, based on access to broadband Internet • Resource efficient Europe– supports the shift towards a resource-efficient, low-carbon economyand the desire to eliminate the dependence of economic growth from environmental degradation Lecture, University of Economics Poznań, 18 February 2011

  11. Guiding initiatives (flagship initiatives) • An Industrial Policy for the Globalisation Era– improving the conditions for entrepreneurship and supporting the development of a strong industrial base, capable to compete on a global scale • An agenda for new skills and jobs– creating conditions for modernization of labor markets by facilitating mobility of workers and developing their skills in order to increase employment and ensure the sustainability of European social models Lecture, University of Economics Poznań, 18 February 2011

  12. Guiding initiatives (flagship initiatives) • European platform against poverty– ensuring economic, social and territorial cohesion by helping the poor and excluded people and enabling them to actively participate in economic and social life Lecture, University of Economics Poznań, 18 February 2011

  13. Synergy of the Strategy with the EU initiatives • On January 26th, 2011 European Comission published guiding initiative Resource efficient Europe, which is the instrument for implementation of the Strategy • It is essential to use the resources efficiently in European policies on energy, climate change, transport, industry, agriculture, fisheries, biodiversity and regional development Lecture, University of Economics Poznań, 18 February 2011

  14. Synergy of the Strategy with the EU initiatives • By usingthe effect of synergy between different policies, the initiative is intended to help in achieving the objectives set by the EU, such as long-term goal of reducing greenhouse gas emissions by 80-95% by 2050, reforming the agricultural sector and fisheries, increasing food security in developing countries and increasing the EU resistance to the risks connected with global growth in prices of energy, raw materials, goods and services. Lecture, University of Economics Poznań, 18 February 2011

  15. Synergy Strategy - Action Plan • Work out an action plan for the EU low carbon economy by 2050; an action plan for energy sector by 2050; and anaction plan for resource efficient Europe • Work out a plan for energy efficiency by 2020 and strategy for sustainable competitiveness in the construction sector Lecture, University of Economics Poznań, 18 February 2011

  16. Synergy Strategy - Action Plan • Development of energy infrastructure (including intelligent grid), trans-European transport networks and the adoption of the White Paper on the future of the transport sector • Revision of the Directive on excise duty on energy Lecture, University of Economics Poznań, 18 February 2011

  17. Synergy Strategy - Action Plan • Preparation of the proposal to reform the Common Agricultural Policy, Common Fisheries Policy and Cohesion Policy in accordance with the priorities of Europe 2020 Strategy • In relation to each of the above mentioned areas, the European Commission will submit concrete proposals for action, which will be monitored within the framework of Europe 2020 Strategy Lecture, University of Economics Poznań, 18 February 2011

  18. Agriculture and international trade • Trade in agricultural products in the EU is responsible for 6% of total trade • Declining trend can be observed; for example, in 1995, trade in agricultural products accounted for 9% of total EU trade • The source of this trend is the development of trade in industrial products over the past 15 years, which accounts for approximately 150%. At the same time, trade in agricultural products increased by approximately 60% Lecture, University of Economics Poznań, 18 February 2011

  19. Trends in international trade Source: data from the European Commission website – DG TRADE Lecture, University of Economics Poznań, 18 February 2011

  20. The value of international trade in agricultural products • The annual trade in agricultural products with third countries is approximately 160 billion per year • The exchange is balanced, the value of both export and import amounts to around 80 billion euros a year • In the past, trade in agricultural products generated a negative balance Lecture, University of Economics Poznań, 18 February 2011

  21. International trade in agricultural products • Enlargement of the European Unionfor new countries in 2004 resulted in an increase of trade with third countries by about 60% • The European Union is currently the world's largest importer and the largest exporter of agricultural products • It is connected in particular with the trade exchange with developing countries Lecture, University of Economics Poznań, 18 February 2011

  22. The balance for international trade in agricultural products Lecture, University of Economics Poznań, 18 February 2011

  23. The balance for international trade in agricultural products • Security and stability of supplying agricultural products were the main reasons for development of the Common Agricultural Policy in the 60's • Even today, when trade is balanced, in the area of ​​some products, the EU still imports far morethan exports Lecture, University of Economics Poznań, 18 February 2011

  24. The balance for international trade in agricultural products Lecture, University of Economics Poznań, 18 February 2011

  25. The balance for international trade in agricultural products • The EU is a net importer of most resources. In the area of trade, the deficit is about 25 billion euros. This deficit is generated in particular by oil products, fruits and vegetables • The surplus is generated by dairy products. Trade in crops and products connected with farm animals is balanced Lecture, University of Economics Poznań, 18 February 2011

  26. The balance for international trade in agricultural products • The European Union is a net exporter of processed agricultural products. The surplus is about 20 billion euros • Import from 10 most important trading partners of the European Union represents more than half of the total agricultural imports. Brazil was responsible for 12 billion euros or 16% of imports. United States accounted for 9% of total imports, while Argentina for 8% Lecture, University of Economics Poznań, 18 February 2011

  27. Import of agricultural products to the EU – most important sources of import – countries Lecture, University of Economics Poznań, 18 February 2011

  28. Import of agricultural products to the EU– most important sources of import - regions Source: data from the European Commission website – DG AGRI Lecture, University of Economics Poznań, 18 February 2011

  29. Export of agricultural products from the EU - most important sources of export - countries • More than half of exports from the European Union goes to the 10 most important trading partners • The United States is responsible for 19% of total exports from the EU, Russia for 10%, and Switzerland for 7% Lecture, University of Economics Poznań, 18 February 2011

  30. Export of agricultural products from the EU– most important sources of export - countries Lecture, University of Economics Poznań, 18 February 2011

  31. Export of agricultural products from the EU - most important sources of export - regions Source: data from the European Commission website – DG AGRI Lecture, University of Economics Poznań, 18 February 2011

  32. Structure of imports of agricultural products in the EU Lecture, University of Economics Poznań, 18 February 2011

  33. Import of agricultural products from developing countries Lecture, University of Economics Poznań, 18 February 2011

  34. International agreements • Agreement on free trade areas (FTA) with third countries • Agreement on Partnership and Cooperation(PCA) • Association Agreement • Sectoral agreements Lecture, University of Economics Poznań, 18 February 2011

  35. Agreement on free trade areas (FTA) with third countries Example: • South Korea Lecture, University of Economics Poznań, 18 February 2011

  36. The most important, recently ongoing negotiations of EU with the third countries: • CENTRAL AMERICA • ARMENIA, GEORGIA, • ASEAN • BRAZIL • CHINA • EUROMED • INDIA • JAPAN • CANADA  • SOUTH KOREA • ACP COUNTRIES • MERCOSUR • GCC - Gulf Countries Council • RUSSIA • UKRAINE • ANDEAN COMMUNITY Lecture, University of Economics Poznań, 18 February 2011

  37. European Union Enlargement • Croatia • Iceland • Macedonia • Turkey Lecture, University of Economics Poznań, 18 February 2011

  38. Agriculture and public goods • Multifunctionality of European agriculture • The definition of public goods • Types of goods provided by agriculture • Global • Local • Awarding for public goods • Variants • Problems Lecture, University of Economics Poznań, 18 February 2011

  39. Multifunctionality of European agriculture • The Cork Declaration 1996 Lecture, University of Economics Poznań, 18 February 2011

  40. The definition of public goods • According to Paul Samuelson, public goods are goods of the following characteristics: • no one is excluded from the benefits arising from their use (no exclusion from consumption) • increase in the number of users does not eliminate or reduce the possibilities of using particular goodsby all users (they are not competitive in consumption) Lecture, University of Economics Poznań, 18 February 2011

  41. Division of public goods: • Global • Local Lecture, University of Economics Poznań, 18 February 2011

  42. Global public goods are goods that are universal for all countries, social groups and generations, e.g.: • oxygen production • carbon sequestration • protection of biodiversity • protection of water • ensuring food safety Lecture, University of Economics Poznań, 18 February 2011

  43. Local public goods are goods that are consumed on the local level, e.g.: • land protection • water erosion, relates to more than 20% of the area of our country • protection of water • protection of landscape • protection of rural heritage • creating conditions for leisure and recreation • creating jobs in rural areas Lecture, University of Economics Poznań, 18 February 2011

  44. Variants of awarding for public goods • direct assessment of the procured goods and paying for them • payment for the use of property rights to resources or factors of production • payment for the lost income connected with the supply of public goods related to the environment • Covering of the transaction costs Lecture, University of Economics Poznań, 18 February 2011

  45. The objectives of the future CAP • Economic efficiency and competitiveness • Food safety • Distribution of income • Rural public goods • Protection of the environment • Protection of landscape • Food Standards • Animal welfare • Development of rural areas Lecture, University of Economics Poznań, 18 February 2011

  46. The priorities of Polish presidency ( 1 July 2011 – 31 December 2011) • promotion of investment associated with the development of renewable energy sources in rural areas • promotion of activities aimed at increasing energy production from agricultural by-products and residues of agro-food industry • efficient use of EU financial resources • taking care of public goods - food security and multifunctional development • future of the milk and milk products market – abolition of the milk quota in 2015 • simplification of the Common Agricultural Policy Lecture, University of Economics Poznań, 18 February 2011

  47. The draft report „The CAP towards 2020:meeting the food, natural resources and territorialchallenges of the future” - by Albert Dess MEP • A wide debate on global budget of Pillar 1 and 2 • The idea of sustainable and competitive agriculture • Plant and animals welfare • Simplification of the future CAP Lecture, University of Economics Poznań, 18 February 2011

  48. Direct Payments • Not connected with the volume of production • Equitable distribution of the budget under Pillar 1 and Pillar 2between Member States and farmers from each Member State • Strategy of farm payment • Division of direct payments and individual historical benchmarks • Guarantee of basic income for small farms • Simplification of the system of direct payment • No upper limit • Payment for profesionally active farmers Lecture, University of Economics Poznań, 18 February 2011

  49. Sustainable management of natural resources and elements of the environment • Improved sustainable management of natural resources should be linked to direct payments • Any environmental benefits can be efficiently achieved by Member States through the adoption of benefitsfrom Pillar 2 • Participation in programs of sustainable development is mandatory for each farmer receiving direct payments • Compensation for element of the environment in Pillar 2 is powered from the budget of Pillar 1 Lecture, University of Economics Poznań, 18 February 2011

  50. Cross-compliance and simplification • The system of cross-compliance for all beneficiaries of direct payments • Cross-compliance - limited to the control of primary and recognized standards • The elimination of disproportionate burdens placed on livestock by thecross-compliance Lecture, University of Economics Poznań, 18 February 2011